Last Man Standing (3 page)

“I saw some things while I was there that were just astounding,” Dimon recalls. “I remember one client’s CFO being just downright dishonest. I also thought the bureaucracy of many places was over-the-top. The BS that happens at so many companies—I was blown away by it. I didn’t want to be a consultant, but I learned a lot there, including the idea of fundamental research. I had no idea that if you were working for a fishing rod company, you could go to the library and look at 24 fishing magazines. And that there were fishing mailing lists and that kind of thing. It opened my eyes to all of that.”

• • •

Among his brothers, Jamie was alone in pursuing business. Freed by their upper-middle-class upbringing to do exactly as they pleased, both Ted and Peter chose intellectual pursuits. Peter got a PhD in physics from the University of Chicago, and Ted Jr. became an educator and an expert in a mind-body discipline known as the Alexander technique. But Jamie never lost sight of his original goal: “success.”

The year that Jamie entered Harvard Business School (HBS), 1980, Wall Street was a wreck, and corporate America was stumbling after the cursed late-1970s period of stagflation. “Not many people were going into finance at the time,” recalls the HBS professor Jay O. Light. “In that sense, it was a special class, people who were
truly
interested in finance, and not just following the crowd.”

Dimon stood apart even among that group—which included the future hedge fund managers Seth Klarman and Steven Mandel; the future chairman and CEO of G.E., Jeffrey Immelt; and the future president of Comcast, Stephen Burke. Within weeks of arriving at school, Dimon showed his fearlessness. Discussing a case study about the financial operations of a cranberry co-op, he challenged a professor. Case studies, the bread and butter of education at HBS, involved a group approach to solving issues in highly complex business situations—usually taken from real life—for companies and their managers. “Imagine 80 or
90 people, most of them feeling insecure, that they were an admissions mistake of some sort,” recalls Burke. “And Jamie raises his hand and says, ‘You’ve made a mistake.’ Everyone froze. We all thought he was committing suicide. But Jamie walked up to the board and changed a few things, and the next thing you know, the teacher said, ‘Oh my God, you’re right.’ It was a confidence with no fear.”

Jay Light noticed the same thing that Mike Ingrisani had at Browning—Dimon had a powerful independent streak, and often a different grasp of what a manager’s priorities should be in case studies. He bore down on fundamental issues such as expense strategy and risk management. One day, in a class discussion of various fixed income investments, Light challenged Dimon on the concept of investing in a long-term zero coupon bond that nevertheless had a 15 percent yield-to-maturity. (In other words, although the bond offered no annual interest payments, it was selling at a price that would offer a 15 percent annualized return at maturity.) Dimon launched a bomb into the middle of class: “If you don’t see the merits of investing in a 15 percent zero coupon bond, Professor Light, then you probably shouldn’t be teaching this class.”

James “Longo” Long, who had come to Harvard after a stint at Hewlett-Packard in California, was dismayed by what he considered the lack of concrete “business” experience of many classmates who had worked in investment banking and consulting. “These people don’t know much, but they do know how to talk all the time,” he thought. He’d been told that half of the education at HBS was what one learned from other students, and this didn’t look as though it was going to be much. But Long took a liking to Dimon, who didn’t seem preoccupied with merely impressing others, and ended up in a study group with his new friend by the end of the year. “He was a straight shooter,” recalls Long. “It was fun to be friends with him, even though he could be a pretty serious guy.”

(Dimon did like to unwind. He, Burke, Long, and their classmate Peter Maglathlin formed what they called the Thursday Night Club, and usually went out and drank from 90-ounce “scorpion bowls”—a lethal concoction of fruit juice and rum. The club congregated at the
Hong Kong on Harvard Square—affectionately referred to as “the Kong”—and hashed through the events of the previous week.)

At business school, Dimon was obsessed with self-improvement. On midterm exams in the first year, he performed extremely well in all but one class, the study of organizational behavior, in which he was only slightly better than average. Burke, though, had aced the midterm in organizational behavior. “It drove him crazy that he didn’t do well and I did,” recalls Burke. But Dimon then surprised him. He asked if he could read Burke’s “blue book”—the universal medium of college exams—so that he might understand why Burke had done better. No one had ever asked Burke
why
or
how
he had done well on an exam, but he nevertheless allowed Dimon to try to do just that. Come finals, Dimon was near the top of the class. “Part of his psyche is having a strong enough ego to be willing to say, ‘I want to know why you did better than me,’” says Burke. “To put himself out there like that.”

He also stood out for another reason. Business schools, by their nature, tend to be chock-full of Republicans. But Dimon was a Democrat, and an outspoken one at that. He was also prone to conversational tangents on the importance of ethics and the imperative of “doing the right thing,” topics that had yet to enter the lexicon of most of his business school peers.

(The independent Dimon even cultivated an outsider persona in nonacademic ways. He didn’t live in university housing, instead staying in an apartment a one-minute walk from campus. He also eschewed the traditional uniform of the B-school student—khakis and button-down shirts—and wore jeans and often a blue leather jacket. His classmates actually remember that of the 75 students in their year, Dimon was the absolute worst dresser.)

Every year, new students are told that half of their grade in each course with be based on class participation. The result: a room full of overanxious overachievers trying to interrupt one another, for fear of not being noticed by the professor. On the
second
day of class in his first year of business school, Dimon was speaking when another student began wildly waving a hand. Dimon turned toward the student and said, “Put your fucking hand down while I’m talking.” The student
slumped down into his seat, and Dimon moved right on with what he was saying.

• • •

At the start of his second year, Dimon was vice president of the school’s finance club—an indication, if nothing else, of a man who read company financials in his spare time. Judy Kent, an exceedingly attractive and feisty HBS student from Bethesda, Maryland, who had graduated from Tulane and then worked at the management-consulting firm Booz Allen Hamilton in Washington, was one of four roommates of the club’s president. Early in the year, another of Kent’s roommates, Sue Zadek, had met Dimon at the wedding of his friends the Maglathlins and suggested that Kent check out the young man, as he was cute and charismatic. (It was a small world back then. Zadek attended the wedding with Steve Mandel, whom she later married. Also in attendance was Jeffrey Immelt.)

A driven young woman, in her own right, Kent had earned a master’s degree from Catholic University while working for Booz Allen, but she’d decided to attend Harvard for another leg up. The daughter of a real estate entrepreneur, she was the first in her family to go to college. (She claims to have been one of the classmates who watched Jeff Immelt at HBS and predicted that he would run General Electric one day.) After hearing of Dimon from Zadek, Kent grilled Laurie Maglathlin about the brash young student. Although Maglathlin was protective of her friend, she did give him a ringing endorsement.

Walking through campus one afternoon, Kent and Zadek passed by the Pub, a snack bar for students. Zadek pointed Dimon out to her, and Kent was intrigued. “In the midst of pastel shirts, here was this guy wearing all black, and sunglasses,” she recalls. More interesting, though, was the fact that while he was participating in the conversation at his table, he seemed to be completely aware of everything else around him without being consumed by it. “He’s sphinxlike,” Kent thought to herself. Not long afterward, when Dimon called Kent’s apartment to speak to the president of the finance club, she shouted out that she’d like to speak to him after the club’s business had been concluded.

Handed the phone, Judy Kent asked Dimon if he played tennis. “Sure,” he replied. “Fine,” she said, “I’ll meet you tomorrow.” She remembers that although she played as hard as she could she failed to present Dimon with much of a challenge. He asked her afterward if she’d like to get a “malted.” She thought the terminology charming, and said yes, and the two went to the Pub for a drink. (He didn’t have any money, so Kent paid.) She walked him home, kissed him on the cheek, and resolved to see him again. “I was just so drawn to him,” she recalls. “It was instinctual.” A short time later, he asked her out for dinner (he paid this time), and the two were soon inseparable. He even dared to ride with her in her dented, rusty gold 1977 Cutlass. “She drove like a bat out of hell,” recalls their friend Peter Maglathlin.

(There is another, more straightforward version of the story of the meeting of Jamie and Judy, told by their classmate, future G.E. chairman Jeffrey Immelt. When one executive at JPMorgan Chase asked Im-melt about the dynamics in their long-ago Harvard section—specifically, how Jamie and Judy got together—he responded simply, “Judy was by far the best-looking, sexiest, and smartest girl in the class, and Jamie got to her first. That’s about it.”)

Judy was able to break through the young man’s uncompromising exterior and connect with someone who had surprisingly vast reserves of sentimentality. Dimon, for example, worshipped the family dog, Chippy, whom he’d brought to Boston with him. When Chippy later died, the twins (Ted Jr. lived in Boston at the time) decided to bury him at night on a hill he’d enjoyed running on. Taking Judy’s car, Dimon dressed his dog in a favorite rugby shirt and headed off into the night with his brother.

He remembers the experience to this day, in part because he caught a bad case of poison sumac that night, which broke out in sores during finals week. To help him write his exams without oozing all over the blue books, Judy Kent wrapped paper toweling around both of Dimon’s arms, securing it with masking tape. This was true love.

Near the end of their second year, on a weekend at his parents’ country place, Dimon proposed and she accepted. Shortly afterward, on a trip to New York, Dimon surprised his father by asking if he would
play a piece for him and Judy on his violin. “What did you say?” asked Ted Sr., unaccustomed to such requests from the least musically inclined of his three children. “I said, ‘Would you play a piece for us?’” Dimon replied. Ted Sr. did so, and when he put the violin down, Jamie Dimon told his parents that he and Judy were engaged.

Dimon and Kent graduated from HBS in 1982. Dimon was named a Baker Scholar, a distinction bestowed on the top 5 percent of each graduating class. The couple packed their bags and headed for New York City.

Fresh from Harvard Business School, Dimon could write his own ticket on Wall Street. In the spring of 1982, he had three job offers—from the investment banks Goldman Sachs, Lehman Brothers, and Morgan Stanley. He called Sandy Weill, then the chairman of the executive committee of American Express, to ask for advice, and Weill invited Dimon to his office for a chat. Dimon had worked at Goldman Sachs between his first and second years at business school, and that firm was ready to give him an opportunity very few people have ever refused: the chance to work at Wall Street’s most prestigious (and lucrative) partnership. As Stephen Burke puts it, 95 out of 100 of Dimon’s classmates would have taken the offer from Goldman. Dimon told Weill that he was close to a decision to do that very thing.

“What’s more important to you?” Weill asked Dimon. “Making the most money or continuing on the fastest learning curve?” At the time, Weill was in charge of all the treasury and financial functions at American Express, and contending with his own learning curve. He floated a fourth option to Dimon. “How would you like to come be my assistant and we can learn this thing together? We can learn a heck of a lot about how corporate America works and how a diversified financial services company works. You probably won’t make half of what you’d be making at Goldman, but that’s a far more concentrated and high-pressure job, and I don’t know what you’d be
building
.”

Dimon was intrigued. The potential riches aside, one major drawback of the investment banking business is psychological. At their core,
investment bankers don’t actually build anything; they move other people’s money from hither to yon and grab a piece of it as it’s passing by. And here was Weill, offering an entrée at the very top of American Express. Dimon accepted the offer—for two-thirds of what Goldman was offering.

“My goal in life was not to be an investment banker,” Dimon recalls. “I loved the concept of helping build a company … the whole painting. Something that was yours over a long period of time that you could be really proud of. And Sandy had done it before with Shearson. I also thought I could always change my mind if it didn’t work out. It was a little risky, because Sandy was just chairman of the executive committee at American Express—whatever that meant—but he was honest with me. He said, ‘I’m not sure it’s going to work out here, but I think you’re a smart kid and we’ll see how it develops.’”

By choosing Weill over Goldman, Dimon once again set himself apart from the crowd. Although the investment banking industry had not yet reached its mid-1980s apotheosis—as caricatured by a suspender-wearing Michael Douglas in the 1987 film
Wall Street
—the 1980s bull market was already up and running, and investment bankers were feeling giddy and powerful. Most Harvard graduates would have killed for the job at Goldman that Dimon turned down. So began one of the greatest mentor-protégé relationships in the history of American business.